Bank client scammed of $87K inheritance: Police

by WP03 Mar 2014

SHARE

Bank client scammed of $87K inheritance: Police

Advisors with Canadian clients who reside out of country, or have limited activity on their accounts, should take heed, after a Bank of Montreal customer claims he lost an $87,500 inheritance, after the bank allegedly wired the money to an overseas scammer, reported the CBC’s Go Public on Monday.

According to the CBC, BMO customer, Bruce Taylor – a Canadian engineering consultant who resides in Texas – says the account, which held his ‘emergency funds,’ was allegedly emptied, while Taylor was undergoing open heart surgery in Houston two years ago.

Taylor’s inheritance was in term deposits until July 2012, at which time the investments matured and were transferred to a savings account, which Taylor says he didn’t use.

According to an RCMP investigation that began last summer, Taylor’s BMO investment advisor received an initial email from an imposter – which included spelling and grammatical errors – requesting a wire transfer of funds be sent to Taylor’s cousin in August 2012. Faxes, requesting transfers and including Taylor's account number and electronic signatures were subsequently received by his BMO branch in Grand Falls-Windsor, N.L.

A branch staff member asked the individual via email to confirm a phone number, at which time the imposter gave a California number, instead of one from Texas. Although the wire transfer confirmations say “confirmed by phone,” Taylor claims the staff member may have called the imposter, but did not ask the standard security questions, reports the CBC. Police say the staff member says there was a bad phone connection. (continued.)

This is exactly where the KYC fails. Accounts which are not actively managed by an account manager usually go into "inventory" where the financial institution benefits from not paying fees to internal financial advisers. The real problem arises when clients, who expect at least adequate service, are left to the devices of the "customer service" division, usually via 1-800 and three or four sub-menus. Clearly these customer service people have no idea who the client is and are easily tricked when something as seemingly simple as a fax comes in, directing staff to wire money. A previous fax authorization, electronic signature and account number are all that is required.

I hope this case motivates CDN financial institutions to assign each and every account to an adviser and pay these people for the work involved in maintaining a proper business relationship - one that will easily prevent this sort of "inattention fraud".

Perhaps this could have been avoided if this man had used an independent advisor who knew him personally - and who would have been automatically concerned about receiving a California area code to phone a client in Texas.....

The firms I am familiar with are all aware of the risks involved in todays world from con men and fraudsters. There is a solution.

As indicated below we need to know our clients and communicate directly with them when confronted with a request for funds. You need to call them at the number you have on file and if given another number the client needs to prove their identity.

Clients also need to take responsibility for ensuring that they follow their accounts. A client living in the US with an account in Canada is a disaster waiting to happen. Many firms are not going to even allow an account to be opened for a US resident due to compliance issues.

Although I appreciate what MW Shultz says I doubt that any financial institution could afford to pay an advisor to attend to an $87,000 savings account. Given the US residency the client could not purchase mutual funds, would not be able to open a brokerage account and would be better off being advised to move his assets to Texas.